This article was published in the September quarter 2003 issue of Western Australian Statistical Indicators (ABS catalogue number 1367.5)

A BRIEF HISTORY OF WINEMAKING IN WESTERN AUSTRALIA

The winemaking industry in Western Australia began with the planting of grape vines by the English settlers of the Swan River Colony. After the first faltering attempts, 300 cuttings were successfully planted at Hamilton Hill and later moved to the foot of Mt Eliza (Kings Park). Within fifteen years of settlement, grape vines were planted in the Swan Valley, at Australind south of Perth and Toodyay to the east, with other early vineyards established at Katanning, Glen Forrest, Bakers Hill, Armadale, Vasse and New Norcia. The prospects for winemaking were considered promising and in 1834 the first Western Australian wine was produced. By 1895 the Swan Valley, Toodyay, York and areas around Guildford and Fremantle were established winemaking centres, although a lack of consumers kept production on a small scale with just 240 hectares of vines producing 225,000 litres of wine.

The discovery of gold boosted the Western Australian population and caused rapid growth in wine production to 837,000 litres by 1905. In the 1930s, production concentrated on fortified wines, ports, muscats and sherries. The wine industry in Western Australia continued to grow despite the Depression and by 1948 the area of vines exceeded 4,000 hectares. The price of wool increased dramatically in the 1950s and many farmers in the Great Southern and South West of Western Australia abandoned their vines for sheep. Around this time, the emphasis on fortified wine production was brought into question and table wines were seen as the future of the winemaking industry. Attention was focused on the cooler regions in the south, such as Margaret River, Mt Barker - Frankland and Manjimup-Pemberton, where climate and soil conditions were considered highly favourable for the production of light, dry table wines. The birth of the Margaret River wine region occurred at a well-attended public meeting in Busselton in July 1966.

The winemaking industry in Western Australia today is a small but important contributor to the national wine industry, being recognised internationally as a producer of premium and ultra-premium wines. The industry is characterised by small family owned and operated businesses (commonly referred to as boutique wineries) which have established niche markets in Australia and overseas.

STRUCTURE OF THE WESTERN AUSTRALIAN WINEMAKING INDUSTRY

There were 78 winemaking locations in Western Australia in 2002, representing one fifth of all locations in Australia, but accounting for just 3.4% of the national grape crush. The majority (62.8%) of Western Australia's winemaking locations were relatively small in size, crushing between 50-400 tonnes of grapes.

An alternative view of the Western Australian grape-growing and wine production industries is available from the 2001 Census of Population and Housing. According to the Census, there were 1,568 persons whose main job was in the manufacturing or blending of wine and 1,660 persons whose main job was in grape-growing in 2001. This excluded casual workers, such as grape pickers and other seasonal workers, not working in those industries in the week prior to the Census. It also excluded people who worked in grape-growing and wine production as a second job.

EMPLOYMENT IN THE GRAPE-GROWING AND WINEMAKING INDUSTRIES, Western Australia, 1996-2001

Grape-growing

Wine production

Total

1996

2001

Change(a)

1996

2001

Change(a)

1996

2001

Change(a)

no.

no.

%

no.

no.

%

no.

no.

%

Employee

456

1,147

112.1

714

1,335

87.0

1,170

2,482

112.1

Employer

50

194

310.0

30

134

346.7

80

328

310.0

Own account worker

145

295

128.6

23

89

287.0

168

384

128.6

Contributing family worker

15

24

70.0

5

10

100.0

20

34

70.0

Total(b)

666

1,660

124.5

772

1,568

103.1

1,438

3,228

124.5

Part-time

221

496

101.6

226

405

79.2

447

901

101.6

Full-time

438

1,132

132.6

542

1,147

111.6

980

2,279

132.6

Total(b)

666

1,660

124.5

772

1,568

103.1

1,438

3,228

124.5

(a) Change from 1996 to 2001.

(b) Includes a small number of persons who did not report employment status.

Source: ABS data available on request, Census of Population and Housing.

The total number of Western Australians whose main job was in grape-growing or wine production increased by 124.5% between 1996 and 2001. During this period, the number of employers in both grape-growing and wine production more than tripled (increasing by 310.0% and 346.7% respectively), while the total number of employees in the two industries more than doubled (increasing by 112.0%). In 2001, over 70% of persons working in Western Australia's grape-growing and wine production industries worked full-time - up from 68% in 1996.

WESTERN AUSTRALIA'S WINE-PRODUCING REGIONS

The wine-producing regions of Western Australia are defined by the Australian Wine and Brandy Corporation Act which sets out wine zones, regions and sub-regions based on Australian Geographical Indications. There are five wine zones in Western Australia - Greater Perth, Central Western Australia, South West Australia, West Australian South East Coastal and Eastern Plains, Inland and North of Western Australia. These zones are further broken down into nine regions - Perth Hills, Swan District, Blackwood Valley, Geographe, Great Southern, Manjimup (proposed), Margaret River, Pemberton (proposed) and Peel, which are the focus of this article.

WINE ZONES OF WESTERN AUSTRALIA

FACTORS AFFECTING WINEMAKING

There are many factors which influence winemaking activity. Wine is an agricultural product that is vulnerable to the forces of nature and the resulting seasons and weather. Unforeseen events such as the recent drought can have a dramatic effect on the winegrape harvest. The nature of the wine production cycle means that there is a lag of four to six years between the planting of vines and the production of wine from those vines. Despite careful planning, this can lead to periods of shortage and surplus as suppliers try to predict and match future demand. Together with the changing preferences of wine consumers, this makes it difficult for winemakers to make successful production decisions. External forces such as the state of local and overseas economies, changes to legislation and regulationsand changes in market structure can also influence the success or failure of winemakers.

VINES AND GRAPE PRODUCTION

Season 2002 was described by the Australian Wine and Brandy Corporation (AWBC) as challenging for Western Australia's winegrape growers, with below average temperatures throughout the growing season and water restrictions limiting irrigation during summer. Harvest was delayed due to cool and wet spring weather, but the long, mild and dry summer provided favourable ripening conditions, resulting in high quality fruit with excellent flavour concentration.

The total area of vineyards cultivated in Western Australia in season 2002 was 11,381 hectares, an increase of 4.2% on season 2001. The total area of vines planted to white grape varieties increased by 5.2% while the total area planted to red grape varieties increased by 3.7%.

Grape production for winemaking rose by 3.3% to 63,559 tonnes in season 2002. The increase was entirely due to a rise in the production of red grapes for winemaking, up by 13.4%, while the production of white grapes for winemaking fell by 7.8%. The major grape varieties produced for winemaking in season 2002 were Cabernet sauvignon (14,080 tonnes produced), Shiraz (13,718 tonnes), Chardonnay (8,444 tonnes), Semillon (6,029 tonnes), Sauvignon blanc (5,948 tonnes) and Merlot (5,613 tonnes).

Despite an increase in the volume of grapes produced, the gross value of grape production in Western Australia in 2001-02 was 5.0% lower than in the previous year (down from $102.2 million to $97.1 million) - partly reflecting a decrease in the price paid for wine grapes. Over the five years to 2001-02, however, the value of Western Australia's grape production almost tripled (increasing by 194.2%). During this period, the value of grape production as a proportion of the total value of agricultural commodities produced in Western Australia increased from 0.8% to 1.8%.

The principal wine-producing area in Western Australia is the South West Australia wine zone which accounted for 80.9% (9,208 hectares) of the total area of vines and 86.2% (54,804 tonnes) of the total grape production for winemaking in season 2002. In contrast, the Eastern Plains, Inland and North of Western Australia zone contributed 0.6% (72 hectares) of the total area of vines and 0.02% (15 tonnes) of the total grape production for winemaking in season 2002.

Despite being the principal wine-producing area in the state, South West Australia experienced the smallest growth in total area of vines (2.8%) in season 2002. The largest growth in the total area of vines occurred in the smallest wine-producing area of Eastern Plains, Inland and North of Western Australia, up by 67.4% from season 2001. Central Western Australia was the only wine zone to record a fall in the total area of vines in season 2002, down by 4.6%.

West Australian South East Coastal experienced the largest increase in grape production for winemaking, rising by 99.3% from 304 tonnes in season 2001 to 606 tonnes in season 2002. Eastern Plains, Inland and North of Western Australia, Central Western Australia and Greater Perth zones all recorded falls in grape production for winemaking, down by 71.1%, 37.4% and 9.6% respectively from season 2001.

AREA AND PRODUCTION OF GRAPES(a) BY AUSTRALIAN GEOGRAPHICAL INDICATIONS, Western Australia

Total area of vines

Grape production for winemaking(b)

2001

2002

Change(c)

2001

2002

Change(c)

Wine zone

ha

ha

%

tonnes

tonnes

%

GREATER PERTH

Total red grapes

884

1,018

15.2

2,800

2,906

3.8

Total white grapes

805

837

4.0

6,032

5,076

-15.8

Total

1,689

1,855

9.8

8,832

7,982

-9.6

CENTRAL WESTERN AUSTRALIA

Total red grapes

67

61

-9.0

94

61

-35.1

Total white grapes

41

43

4.9

148

90

-39.2

Total

108

103

-4.6

243

152

-37.4

SOUTH WEST AUSTRALIA

Total red grapes

5,720

5,804

1.5

29,117

33,161

13.9

Total white grapes

3,234

3,403

5.2

22,990

21,643

-5.9

Total

8,955

9,208

2.8

52,107

54,804

5.2

WEST AUSTRALIAN SOUTH EAST COASTAL

Total red grapes

85

96

12.9

169

383

126.6

Total white grapes

37

46

24.3

135

223

65.2

Total

122

142

16.4

304

606

99.3

EASTERN PLAINS, INLAND AND NORTH OF WESTERN AUSTRALIA

Total red grapes

34

60

76.5

35

12

-65.7

Total white grapes

9

13

44.4

16

4

-75.0

Total

43

72

67.4

52

15

-71.1

TOTAL WESTERN AUSTRALIA

Total red grapes

6,790

7,039

3.7

32,216

36,524

13.4

Total white grapes

4,126

4,342

5.2

29,321

27,036

-7.8

Total

10,917

11,381

4.2

61,537

63,559

3.3

(a) At harvest.

(b) Fresh weight.

(c) Change from 2001 to 2002.

Source: Australian Wine and Grape Industry (cat. no. 1329.0).

GRAPE CRUSH

A total of 51,246 tonnes of winegrapes were crushed in Western Australia for vintage 2002, down by 1.4% from vintage 2001. Total red grapes crushed rose by 9.9% to 28,538 tonnes for vintage 2002, driven by increases in the crushes of the red grape varieties of Merlot, up by 24.3%; Cabernet sauvignon, up by 14.2%; and Shiraz, up by 12.9%. Falls in the crushes of the white grape varieties of Chardonnay, down by 27.2%; Chenin blanc, down by 26.0%; and Verdelho, down by 24.4% contributed to a decrease of 12.7% in total white grapes crushed to 22,709 tonnes for vintage 2002.

The Margaret River wine region accounted for 44.4% (12,661 tonnes) of total red grapes crushed and 42.9% (9,749 tonnes) of total white grapes crushed in Western Australia for vintage 2002, and contributed 43.7% (22,410 tonnes) of total winegrapes crushed in the state. The Great Southern region accounted for a further 20.7% of total winegrapes crushed.

The Geographe wine region recorded the largest growth in total winegrapes crushed for vintage 2002, up by 118.3% to 5,055 tonnes. This large increase was driven by a rise of 134.6% in total red grapes crushed. Blackwood Valley also experienced a large increase in total winegrapes crushed for vintage 2002, up by 73.7% to 1,725 tonnes, driven by almost equal increases in total red grapes crushed (75.5%) and total white grapes crushed (71.1%). Several wine regions recorded falls in total winegrapes crushed for vintage 2002, the largest of these being a decrease of 48.7% in the Manjimup region. Other regions to record fallswere Swan District, down by 25.2%; Pemberton, down by 18.3%; and Great Southern, down by 7.4%.

According to estimates from the Australian Regional Winegrape Crush Survey, the immediate future of the Western Australian wine industry appears positive, with the state's total winegrape crush expected to grow by 19.7% to 61,336 tonnes over the next five years. Total white grapes crushed are expected to increase by 23.3% and total red grapes crushed are also forecast to rise by 16.8% over the five years to 2007. The Manjimup region is expected to be the area of largest growth, with the total winegrape crush forecast to rise by 192.7%. Other regions expected to experience increases in total winegrapes crushed are Margaret River (40.6%), Swan District (34.3%), Pemberton (15.3%) and Great Southern (0.2%).

WINEGRAPE CRUSH BY AUSTRALIAN GEOGRAPHICAL INDICATIONS, Western Australia

Total winegrape crush(a)

Estimated winegrape crush(b)

2001

2002

Change

2003

2004

2005

2006

2007

Wine region

tonnes

tonnes

%

tonnes

tonnes

tonnes

tonnes

tonnes

PERTH HILLS

Total red grapes

398

556

39.7

556

242

254

256

257

Total white grapes

287

373

30.0

348

141

148

150

150

Total

685

928

35.5

905

383

402

405

407

SWAN DISTRICT

Total red grapes

1,591

1,217

-23.5

1,420

1,606

1,810

2,001

2,169

Total white grapes

4,639

3,441

-25.8

3,547

3,779

4,051

4,281

4,086

Total

6,230

4,658

-25.2

4,967

5,384

5,861

6,282

6,255

BLACKWOOD VALLEY

Total red grapes

560

983

75.5

858

990

1,111

1,083

1,058

Total white grapes

433

741

71.1

463

490

482

492

456

Total

993

1,725

73.7

1,321

1,480

1,593

1,575

1,514

GEOGRAPHE

Total red grapes

1,469

3,447

134.6

2,495

2,244

1,931

1,672

1,675

Total white grapes

848

1,608

89.6

1,301

1,265

1,106

1,072

1,072

Total

2,316

5,055

118.3

3,796

3,509

3,037

2,744

2,747

GREAT SOUTHERN

Total red grapes

6,856

6,484

-5.4

8,625

9,264

6,023

6,229

6,293

Total white grapes

4,580

4,109

-10.3

5,663

6,101

3,996

4,183

4,326

Total

11,435

10,594

-7.4

14,288

15,364

10,019

10,412

10,619

MARGARET RIVER

Total red grapes

10,670

12,661

18.7

16,491

17,826

18,214

17,804

17,642

Total white grapes

11,196

9,749

-12.9

12,554

13,330

14,047

13,820

13,869

Total

21,867

22,410

2.5

29,046

31,157

32,261

31,624

31,511

MANJIMUP

Total red grapes

1,177

567

-51.8

490

579

783

1,011

1,623

Total white grapes

742

417

-43.8

406

455

694

1,042

1,257

Total

1,918

984

-48.7

896

1,034

1,477

2,053

2,880

PEMBERTON

Total red grapes

2,644

2,409

-8.9

2,586

2,677

2,723

2,598

2,457

Total white grapes

2,706

1,962

-27.5

2,594

2,752

2,723

2,721

2,583

Total

5,350

4,371

-18.3

5,180

5,429

5,446

5,319

5,040

WESTERN AUSTRALIA - OTHER

Total red grapes

603

213

-64.7

201

218

234

234

155

Total white grapes

587

309

-47.4

280

286

294

264

209

Total

1,190

522

-56.1

481

504

528

498

364

TOTAL WESTERN AUSTRALIA

Total red grapes

25,968

28,538

9.9

33,722

35,646

33,082

32,886

33,327

Total white grapes

26,017

22,709

-12.7

27,157

28,599

27,541

28,025

28,008

Total

51,985

51,246

-1.4

60,879

62,244

60,623

60,911

61,336

(a) Includes tonnages crushed that were grown in winery-owned vineyards and purchased from independent grape growers, other wineries and agents.

(b) Includes tonnages expected to be sourced from the winemaker's vineyards in each year of the five year projection period and tonnages expected to be purchased by the winemaker in each year of the five year projection period, taking into account contracted fruit and expectations of what may be purchased on the spot market.

Vintage 2002 was described by the AWBC as an excellent vintage for Western Australian wine and the best year for whites for some time. White wines were reported as demonstrating exceptional fruit characteristics and good natural acid balance. Red wines were also reported to be of high quality and showing excellent promise.

Western Australia produced 39.1 million litres of beverage wine in 2001-02, an increase of 5.2% on 2000-01. Production of unfortified wine rose by 5.3% to 39.1 million litres, accounting for almost 100.0% of total beverage wine production. Fortified wine production, however, fell by 60.0% to just 10,000 litres.

Beverage wine production in Western Australia more than tripled over the five years from 1997-98 to 2001-02, increasing by 207.6% from 12.7 million litres in 1997-98 to 39.1 million litres in 2001-02. Production of unfortified wine increased by 208.1% over the five year period and its share of total beverage wine production increased slightly from 99.8% in 1997-98 to almost 100.0% in 2001-02. Fortified wine production decreased by 66.7% over the five year period while its share of total beverage wine production fell from 0.2% in 1997-98 to just 0.03% in 2001-02.

WINE PRODUCTION, Western Australia(a), 1997-98 to 2001-02

1997-98

1998-99

1999-00

2000-01

2001-02

Change(b)

Wine type

'000 L

'000 L

'000 L

'000 L

'000 L

%

Beverage wine

Fortified(c)

30

7

11

25

10

-66.7

Unfortified(d)

12,692

20,166

22,189

37,154

39,108

208.1

Gross total wine

12,722

20,173

22,200

37,178

39,118

207.5

Net total wine(e)

12,717

20,171

22,199

39,108

39,116

207.6

(a) Production by winemakers crushing more than 400 tonnes annually or with sales of more than 250,000 litres.

(b) Change from 1997-98 to 2001-02.

(c) Relates only to production from unfortified wine of the same vintage.

(d) For manufacturing brandy and grape spirit. Includes wine obtained from marc.

Source: ABS data available on request, Wine and Spirit Production Survey.

Western Australia's share of total Australian wine production grew by an average of 16.0% per year from 1997-98 to 2001-02. Wine produced in Western Australia accounted for 1.9% of total Australian wine production in 1997-98, before rising to a high of 3.6% in 2000-01. Western Australia contributed 3.3% of wine produced nationally in 2001-02.

WINE PRODUCTION, Western Australia, Proportion of total Australian productionSource: ABS data available on request, Wine and Spirit Production Survey.

WINE EXPORTS

Exports of wine from Western Australia experienced significant growth over the five year period from 1998-99 to 2002-03. Total wine exported from Western Australia increased by 298.2% from 1.3 million litres in 1998-99 to 5.0 million litres in 2002-03, representing an average annual growth rate of 42.6%. The growth in exports was driven by exports of table wine, which increased by 305.2% from 1.2 million litres in 1998-99 to 4.9 million litres in 2002-03. Exports of table wine accounted for 96.9% of total wine exported from Western Australia in 2002-03.

Despite the strong growth in the quantity and value of wine exported from Western Australia between 1998-99 and 2002-03, the average dollar-per-litre value decreased by 16.7% over the same period, from $10.77 in 1998-99 to $8.97 in 2002-03. The movements in average dollar-per-litre value reflect recent economic conditions and in particular, the strength of the Australian dollar.

EXPORTS OF WINE, Western Australia, 1998-99 to 2002-03

Wine type

Total wine

White table

Red/rose table

Total table

All other wine(a)

Quantity

Value

Average dollar-per-litre value(b)

Period

'000 L

'000 L

'000 L

'000 L

'000 L

$'000

$

1998-99

609

599

1,208

27

1,269

13,672

10.77

1999-00

865

966

1,832

61

1,893

18,742

9.90

2000-01

1,610

1,538

3,148

108

3,258

28,161

8.64

2001-02

1,923

1,878

3,801

116

3,917

36,682

9.36

2002-03

1,892

3,003

4,895

159

5,054

45,353

8.97

(a) All other wine includes fortified, sparkling and other wine.

(b) Total value divided by total quantity.

Source: ABS data available on request, International Trade database.

Over the five years from 1998-99 to 2002-03, the volume of wine exported from Western Australia accounted for an increasing share of the total volume of wine exported from Australia, rising from 0.6% in 1998-99 to 1.0% in 2002-03. This represented an average annual growth rate of 15.2% over the five year period.

EXPORTS OF WINE, Western Australia, Proportion of the total volume of wine exported from AustraliaSource: ABS data available on request, International Trade database.

The United Kingdom was the major country of destination for Western Australia's wine exports in 2002-03, having received 1.7 million litres of wine, valued at $14.3 million. Exports to the United Kingdom accounted for 33.3% of the quantity of total wine exported from Western Australia in 2002-03. Other significant export markets for wine from Western Australia in 2002-03 were the United States of America and New Zealand, having accounted for 22.2% and 8.5% respectively of the quantity of wine exported in 2002-03.

Over the five years from 1998-99 to 2002-03, Western Australia's largest growing export market for wine was New Zealand. The quantity of wine exported to New Zealand increased from 7,000 litres in 1998-99 to 431,000 litres in 2002-03. Other destinations to record large growth in the quantity of wine received from Western Australia over the period 1998-99 to 2002-03 were Canada, which rose from 26,000 litres in 1998-99 to 207,000 litres in 2002-03; and Ireland, which increased from 16,000 litres in 1998-99 to 121,000 litres in 2002-03.

TOP 10 DESTINATIONS FOR WINE EXPORTS, Western Australia, 1998-99 to 2002-03(a)

1998-99

1999-00

2000-01

2001-02

2002-03

Quantity

Value

Quantity

Value

Quantity

Value

Quantity

Value

Quantity

Value

Country of destination

'000 L

$'000

'000 L

$'000

'000 L

$'000

'000 L

$'000

'000 L

$'000

United Kingdom

486

4,992

718

5,962

675

6,864

1,223

12,184

1,681

14,302

Unites States of America

249

2,508

377

3,471

667

7,707

830

9,449

1,123

11,828

New Zealand

7

71

14

133

36

371

128

789

431

2,078

Singapore

85

1,254

94

1,485

544

2,107

172

2,199

208

2,252

Canada

26

281

44

456

67

761

118

1,271

207

2,149

Germany

29

484

42

609

130

820

456

988

179

1,323

Denmark

35

342

29

292

29

320

53

642

154

1,203

Japan

91

1,021

117

1,309

108

1,383

131

1,489

151

1,571

Ireland

16

190

28

338

62

566

48

512

121

953

Hong Kong

35

392

64

585

77

850

110

1,031

117

1,072

Total exports

1,269

13,672

1,893

18,742

3,258

28,161

3,917

36,682

5,054

45,353

(a) Destinations ranked by quantity of wine received in 2002-03.

Source: ABS data available on request, International Trade database.

CONCLUSION

The winemaking industry in Western Australia has grown from humble beginnings to become an increasingly important industry for the state. Vineyards and wineries together with their value-added features such as restaurants make vital contributions to regional economic development through investment, employment and tourism. Although the Western Australian industry is a small contributor to the Australian winemaking industry, it is recognised as a significant producer of premium and ultra-premium wines. The industry has experienced significant increases in wine production and exports over the last five years and is one of the fastest growing winemaking industries in the country.